Consumer confidence, costs, train strikes, BrewDog, 888, Netflix & other:

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A DAY IN THE LIFE:

Unlike a lot of dog owners, I’m not afflicted by the belief that my pooch is the brightest dog in the world.

In fact, quite the opposite.

Because, having been saddled with a line of thick dogs, I have no delusions about ours being able to read, write or crack algebraic problems.

however, as she manages to refrain from barking at 6am at the weekends, a time by which she would ‘normally’ be demanding attention, I have to conclude that she might be able to count to five and therefore must attribute a certain amount of intelligence to her.

However, try as I might, I can’t get the idea of Bank Holidays into her head.

And, with May coming up, that probably means I’ll be up and about – or at least I’ll have been throwing slippers at the dog for some time – from about 5.30am on both Mondays.

Anyway, enough of that. There are problems in the world so, without further ado, let’s move on to the news:

PUBS & RESTAURANTS:

Consumer confidence:

Accountant Deloitte has reported that consumer confidence rose sharply to its highest level in two years in Q1 this year. It says that the move was particularly evident across younger people….

• Deloitte’s consumer confidence index rose to a net minus 11 per cent in Q1. It says that the improvement was down to a fall in inflation and a slight easing of the pressure on consumer finances as real wages have been in growth for several months.

• Deloitte says ‘consumer confidence is recovering from the shock delivered by the surge in inflation in the last three years.’ It adds that ‘the bad news for consumers in terms of a softer jobs market has been more than offset by the good news in terms of rising real incomes, falling inflation and lower mortgage rates’ and adds that ‘the revival in consumer confidence speaks to a wider story of an economy that has turned the corner.’

Costs:

Speaking with The Caterer, Allen Simpson, deputy CEO of UKHospitality questions why the government exacerbates the already high costs of running a business, particularly in the hospitality sector, which plays a vital role in community cohesion….

• Simpson declares that the industry is in urgent need of reforms to sustain growth and competitiveness, including a thorough review of business rates and a reduction in VAT rates. The hospitality industry faces escalating operational costs, notably due to increased business rates and the rise in the minimum wage, jeopardising its growth potential and ability to invest in workforce development.

• Mr Simpson concludes that ‘the government can help with that wage bill by reducing employer National Insurance contributions for the sector, just for long enough for businesses to absorb the change.’ He adds that ‘hospitality is unique. It builds communities and it creates places where people want to live, work and invest. Every day, hospitality is serving Britain. We just need a little bit of help.’

Train strikes:

Rail union the RMT has rejected an improved offer of a 3.5% rise in pay from Network Rail. It says ‘the benchmark measure of inflation used for negotiations is the November RPI figure which was 5.3 per cent.’ RMT general secretary Mick Lynch said that ‘such double standards were unacceptable and an insult to hardworking Network Rail staff….’

• Mr Lynch says ‘Network Rail is once again making an offer that represents a cut in living standards as pay is not keeping up with the rising costs of rent, mortgages, energy, food, and other essentials.’ He says ‘as a result, RMT is calling for urgent fresh negotiations and a much-improved offer for this year.’

• The hospitality industry (and commuters) would dearly like to see an end to the disruption caused by rail strikes. They have blighted trading since around June 2022 and have taken the shine both off a couple of Christmases and the recovery from the impact of Covid altogether.

Staffing issues:

UKH has welcomed news that the EU Commission has today proposed to open negotiations to facilitate new youth mobility agreements, allowing young people from the EU and UK to study, work and live in each other’s countries….

• CEO Kate Nicholls says ‘the sharing of cultures, cuisines and knowledge have long been the bedrock of the UK’s world-leading hospitality sector and agreements like Youth Mobility Schemes have been a key part of that success.’ She adds she hopes ‘the EU Council agrees with the proposal and that talks between the UK and EU can begin as soon as possible’.

• Langton. Ms Nicholls says ‘such an agreement would be a huge success for hospitality and tourism and, practically, it would solve challenges for the live music and events sectors.’

• It would help alleviate staffing issues across a number of hospitality’s sub-sectors where operators have had to look outside Europe for staff – or have simply not been able to find any at all – as colleagues from Italy and Eastern Europe have chosen not to jump through the various hoops now necessary to work in the UK.

• And for UK younger people it would reopen possibilities shut off since Brexit with regard to language learning, chalet servicing and the like. The proposal, as we understand it, is to allow four year visas with significantly fewer questions asked.

Late night market:

Per MCA, Rick Jones from PwC attributes challenges in the late-night market to the Licencing Act 2003, which increased competition and eroded high-margin revenue streams for incumbent operators, compounded by rising operational costs….

• Mr Jones notes that unlike nightclubs, competitive socialising venues can operate day and night, offering diverse services to capture a greater share of customer spending, a crucial advantage in today’s discerning market.

COMPANY NEWS:

BrewDog. The Drinks Business reports that the Lost Forest to be planted by BrewDog has seen £700,000 of public money put into the project. However, CEO James Watt has confirmed that over 90,000 trees have died. He says almost half the pine trees and virtually all of the oak trees planted are now dead. A spokesperson from Scottish Forestry comments ‘the level of loss here is higher than normal…’

• This ‘may be down to climatic factors after planting’ although, in the Highlands of Scotland, weather can be pretty much guaranteed to happen. Scottish Forestry adds ‘the agent/owner will be required to replant the failed sections as a condition of the Forestry Grant Scheme contract to ensure that it is a fully stocked woodland at establishment.’

• Mr Watt has said that he is prepared to see shareholders suffer a financial loss in order to “save the planet”. Drinks Business reports that BrewDog had its B Corp status revoked just two years after joining the scheme. Mr Watt said ‘we have decided to step aside from our B Corp certification for the time being. B Lab had requested additional measures from BrewDog and the BrewDog board decided that these were not something we could do at this time.’

DP Poland has announced that 99.8% of shareholders voting, voted in favour of its previously announced equity issue. The company reports that some 206.65m shares will now be admitted to trading on AIM from first thing this morning.

ChaPanda, a Chinese tea chain, aims to raise HK$2.6bn ($330m) in a Hong Kong Stock Exchange listing, selling c10% of its total shares at HK$17.50 ($2.23) each….

• Owned by Chinese billionaire Wang Xiaokun, the company plans to expand its franchise network, particularly in lower-tier cities, after achieving significant growth and positioning itself as the third-largest tea chain in China by outlets.

WatchHouse, a boutique coffeehouse chain, launches a crowdfunding campaign to fuel its global expansion, having already opened 17 locations in the UK and recently expanding to New York. Revenue more than doubled to £16.6m in 2024 from £7.8m in 2022, with the company experiencing a significant increase in app users.

HOLIDAYS, HOTELS & LEISURE TRAVEL:

The Home Office initiates the rollout of eVisas, aiming to transition nearly all UK visa holders to digital proof of immigration status by 2025, starting with invitations to BRP holders to create UK Visas and Immigration accounts. The shift to eVisas aims to enhance border security, reduce fraud and document loss, and pave the way for a contactless border through increased automation.

Strong summer bookings mean that easyJet expects H1 loss before tax to fall to £340-360m (six months to 31 March) from £411m in the year prior. …

• The budget airline said pricing was ‘very strong’  at the start of the period, with revenue per seat up 12% YoY in October. easyJet said demand has bounced back since late November, with half-year figures also boosted by the start of the Easter holidays falling in March this year.

Travel Weekly reports on a disagreement about the ‘recovery’ in air travel between Iata and Eurocontrol, with the former suggesting there has been a ‘full recovery’ and the latter saying air travel was still 9% behind pre-pandemic levels….

• Iata measures traffic in revenue passenger-kilometres (RPKs), which could be inflated due to longer flight distances caused by factors like the closure of Russian airspace and increased travel volumes around China’s Lunar New Year, while Eurocontrol reports the number of flights, potentially missing increases in passenger numbers if aircraft operate at higher load factors or are larger than pre-Covid.

Hoseasons has added Kielder Waterside in Northumberland and Darwin Forest in Derbyshire to its upmarket ‘Magnificent’ collection….

• Hoseasons says ‘only locations with a genuine ‘wow’ factor are considered for our Magnificent Collection, and that’s exactly what guests can expect from Kielder Waterside and Darwin Forest – high-end accommodation, premium facilities and exemplary customer service – all of which are in great demand from the modern day self-catering customer.’

CoStar has reported that ‘performance of U.S. hotel metrics increased year over year in the second week of April thanks to a boost from the total solar eclipse.’ It says that ‘for the week ending April 13, occupancy grew 2.8% to 65.8%. Average daily rate grew 2.9% to $160.20. As a result, revenue per available room rose 5.8% to $105.48.’

OTHER LEISURE:

Netflix, which competes strongly for the consumers’ disposable income globally, reported Q1 numbers overnight that were ahead of market expectations. The results were buoyed by the company’s crackdown on password sharing. The company added unexpectedly that it will stop reporting subscriber numbers each quarter. Some took the announcement to signal that the company believed its performance on that measure could tail off over coming years….

• Netflix is a bigger competitor for the hospitality industry than might first be imagined. When times are tight, consumers may choose to stay at home and, if they are already Netflix subscribers, they may consider its content to be ‘free’. Add in supermarket deals on food and drink and consumers may remain glued to their sofas.

• The company reported that its ad-supported streaming move had helped it to add 9.3 million new customers in Q1, almost double the market estimate. It’s total subscriber numbers globally are now up to 269.6 million as at the end of Q1.

• The company says it wants to focus on revenues rather than subscriber numbers with CEO Greg Peters saying ‘the change is really motivated by wanting to focus on what we see are the key metrics that we think matter most to business.’ Profits in Q1 jumped to more than $2.3bn (£1.85bn). Netflix shares have risen by over 30% in 2024 to date.

888 Holdings has updated on Q1 trading and announced a name-change saying that its Q1 revenues are slightly ahead of guidance but it is making no change to full year expectations. The company reports revenue of £431m, slightly ahead of the £420-430m guidance range previously outlined at the FY23 Results on 26 March 2024….

• The company says this growth it ‘reflecting a continuation of positive sequential quarter-on-quarter trends. The Group continues to expect revenues to return to year-on-year growth from Q2 2024 onwards, with full year 2024 revenue growth expected to be consistent with the mid-term target of 5-9% annual growth.’

• 888 is announcing a ‘new corporate identity – evoke plc – to better reflect new ‘One Company’ approach, to be launched in May 2024, subject to shareholder approval at the AGM on 13 May 2024.’

• CEO Per Widerström says ‘revenue was slightly ahead of our guidance, with strong player volumes converting into improved revenue run rates. Having lapped various regulatory and compliance changes during the quarter, and with increased marketing investment supported by an exciting product pipeline, we remain confident in a return to growth from Q2 2024.’ The CEO adds ‘we are moving decisively and at pace to position our company for long-term success.’

Hipgnosis, a British music royalties investment fund, has agreed to a $1.4bn takeover by Concord Chorus after facing months of turmoil over its structure and leadership. The deal, offering shareholders a 32% premium, could resolve uncertainty over Hipgnosis’s future.

The Telegraph reports research by Compass Lexecon indicates that replacing the BBC’s licence fee funding model with advertising would lead to significant budget cuts, particularly affecting Radio 4, which would face a 50% reduction….

• The study suggests that Radio 1 would need to undergo fundamental changes with a 25% budget cut, while economists caution that increased advertising would depress ad spot values and the BBC’s older audience demographics could hamper its ability to attract brands.

Google is reported to have sacked 28 workers who protested against a deal the company struck with the Israeli government.

FINANCE & MARKETS:

The European Automobile Manufacturers’ Association reports a decline in passenger car sales, with new vehicle registrations dropping by 5.3% across the EU last month, particularly impacting electric vehicles (EVs) which experienced an 11.3% decrease….

• EVs saw market share decline from 13.9% to 13% in March YoY, with automakers like Volkswagen, Mercedes-Benz, and Tesla also reporting declining EV sales in Q1.

US Federal Reserve member Raphael Bostic, President of the Atlanta Fed, has told the BBC that inflation is only coming down “very, very slowly” and “let’s not be in a hurry” on interest rate cuts.

Sterling mixed at $1.2422 and €1.1674. Oil higher at $88.82. UK 109yr gilt yield down 1bp at 4.27%. World markets mixed yesterday but London set to open down around 75 points after overnight reports of an explosion in Iran.

RETAIL WITH NICK BUBB:

The Planet ONS Watch: Notwithstanding the improved outcome for the BRC-KPMG Retail Sales figures for March, thanks to the earlier fall of Easter, City economists still treat the figures from “the Planet ONS” as the definitive guide to High Street spending trends and the consensus was that today’s Office of National Statistics (ONS) Retail Sales figures for March (the 5 weeks to March 30th) would see a small 0.3% rise in month-on-month seasonally adjusted sales volumes, after the flat trend in February, but in fact they were unchanged again (up 0.8% year-on-year)…

Today’s News: There is no company news out this morning, although Currys has announced that it is holding an investor seminar on Tuesday next week, ahead of the pre-close update on May 14th.

Today’s Press: According to the invaluable press summary email from the Guardian, the Guardian itself leads its front-page today with the headline “State could be left with £15bn debt by Thames Water nationalisation”. The Times has “Sunak vows crackdown on ‘culture of sick note’”, while the Telegraph follows the same story with “PM vows to end ‘sicknote culture’”. The i reports “Brexit travel hope for UK students – as EU offers olive branch to Labour”. The Financial Times says “Post-Brexit checks will not be ‘turned on’ when safety rules change”. The Daily Mail covers the rearrest of Peter Murrell in Scotland with “Sturgeon husband charged over SNP cash probe”. Finally, the Daily Mirror has an “Exclusive” from the former aide to the disgraced Conservative MP Mark Menzies, under the headline “I warned the Tories about him 3 months ago”.

News Flow Next Week: Monday brings the Travis Perkins AGM, with the ABF (Primark) interims and the latest monthly Kantar grocery sales figures following on Tuesday. On Thursday we get the Sainsbury finals, the WH Smith interims and the Travis Perkins Q1 update. The monthly GFK Consumer Confidence index is then out first thing on Friday.